1 Cash-Heavy Stock with Exciting Potential and 2 That Underwhelm

A cash-heavy balance sheet is often a sign of strength, but not always. Some companies avoid debt because they have weak business models, limited expansion opportunities, or inconsistent cash flow.

Just because a business has cash doesn’t mean it’s a good investment. Luckily, StockStory is here to help you separate the winners from the losers. That said, here is one company with a net cash position that balances growth with stability and two that may struggle.

Two Stocks to Sell:

Corcept (CORT)

Net Cash Position: $335.6 million (3.5% of Market Cap)

Focusing on the powerful stress hormone that affects everything from metabolism to immune function, Corcept Therapeutics (NASDAQ:CORT) develops and markets medications that modulate cortisol to treat endocrine disorders, cancer, and neurological diseases.

Why Is CORT Not Exciting?

1. Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 16.9 percentage points
2. Earnings per share fell by 2.8% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Corcept’s stock price of $91.64 implies a valuation ratio of 51.7x forward P/E. To fully understand why you should be careful with CORT, check out our full research report (it’s free for active Edge members).

Cohen & Steers (CNS)

Net Cash Position: $95.37 million (2.8% of Market Cap)

Founded in 1986 as a pioneer in real estate investment trusts (REITs), Cohen & Steers (NYSE:CNS) is an investment manager specializing in real estate securities, infrastructure, real assets, and preferred securities for institutional and individual investors.

Why Do We Think Twice About CNS?

1. 2.2% annual revenue growth over the last four years was slower than its financials peers
2. Earnings per share fell by 2.2% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable

At $66.07 per share, Cohen & Steers trades at 20.5x forward P/E. Dive into our free research report to see why there are better opportunities than CNS.

One Stock to Buy:

DexCom (DXCM)

Net Cash Position: $1.67 billion (6.4% of Market Cap)

Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ:DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.

Why Is DXCM a Good Business?

1. Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 17.8% over the past two years
2. Earnings per share have massively outperformed its peers over the last five years, increasing by 17.5% annually
3. Free cash flow margin grew by 8.6 percentage points over the last five years, giving the company more chips to play with

DexCom is trading at $66.36 per share, or 28.5x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

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